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Environment & Poverty Times No. 5

The growth of the low-carbon economy: will Asia take the lead?

World Poverty Distribution  

Electrification and traditional fuels in Sub-Saharan Africa

The Southern African Development Community (SADC) consists of 15 countries with 233 million total inhabitants. Apart from Mauritius and the countries bordering South Africa in the Southern African Customs Union (SACU), the remaining countries exhibit low rates of electricity access and low use of high quality fuels. Easy access to electricity and power increases the living standard and enables the development of additional services.


By Paul Steele, Environment advisor, UNDP Regional Centre in Colombo

Climate change, typically viewed as a threat, also presents a once in a generation growth opportunity as the world shifts to entirely different methods of production and a low-carbon economy. Just as Britain dominated the world in the 18th century after it established its economic power through the use of fossils fuels and the Industrial Revolution, other countries could become future economic and political powers by leading the shift away from fossil fuels and toward low-carbon emissions.

It is only through such radical moves that the impact of climate change can be reduced. The shift to low-carbon economies will generate demand for new products and technologies, promoting growth and opening up markets. But who will seize the opportunities the future has to offer and benefit from this switch to the low-carbon economy?

Asia is one region that could grasp the opportunity. It is a region with the skills, labour, technology base and entrepreneurship to lead the low-carbon revolution. Yet at present progress in Asia on switching to low-carbon economies in Asia is mixed, varying widely from country to country. Asia needs to move fast if it wants to be a market leader.

Competition for low-carbon technologies is picking up in Europe and some parts of the United States as the private sector and some governments start to make the shift. Moreover, the Global Carbon Exchange in London is well established and growing fast, leaving commodity exchanges in Asia lagging behind. But Asia’s private sector can seize the opportunity to lead the decarbonization revolution just as it led the race for globalization. In order for this to happen Asia’s dynamic private sector needs governments to provide proper regulatory frameworks and economic incentives.

The response of governments in Asia has been mixed. Japan is a world leader in energy conservation and has an automobile industry which is aggressively reducing emissions. Tiger economies like Thailand are also changing fast. But the two key economies that really matter in the whole decarbonization equation are China and India.

Both China and India are weighed down, like the US, by heavy dependence on coal – accounting for more than 70 per cent of their total energy needs. While there is still debate within the governments of China and India about the need and scale of emissions targets, public opinion may be changing and some private companies are beginning to see the market opportunities of a low-carbon world. Renewable energy markets are now booming.

One of the richest men in China is the owner of the solar power manufacturer SunTech – recently valued at USD 5 billion. In India – though the clean technology sector is still considered a niche – investors and venture capitalists believe the country is likely to achieve growth in the renewable sector similar to that attained in its information technology industry. Some of the key factors behind the expected growth in renewables are surging energy demands and increasing pressure on water resources.

The positions of the Chinese and Indian governments appear to be shifting. Near Shanghai, China is building Dongtan, the world’s first fully sustainable city which will have a population of 10,000 people by 2010. China has also set tough national targets for energy efficiency, renewables and increased tree cover, though considerable challenges remain in implementing such measures at the provincial level. Meanwhile India has been hit by a series of disasters, including devastating floods, and reports have indicated the country will be among the worst to be affected by climate change. This has had an impact on government policy and India has announced its intention to develop a “Global Warming Road Map”.

The next 10 years will show whether Asia – in particular China and India – can rise to the challenge and opportunities of reducing global greenhouse gases and lead the low-carbon revolution.